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How will restaurants attract people dining out again?

The challenge for bigger restaurant chains will be how to differentiate themselves from other brands to bring in business.

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"I think a lot of restaurant brands, particularly full-service brands, have a once-in-a-lifetime opportunity to reinvent themselves effectively," said R.J. Hottovy, a restaurant analyst at Aaron Allen & Associates.
"I think a lot of restaurant brands, particularly full-service brands, have a once-in-a-lifetime opportunity to reinvent themselves effectively," said R.J. Hottovy, a restaurant analyst at Aaron Allen & Associates.
Frederic J. Brown/AFP via Getty Images

Darden Restaurants announced its financial results for the third quarter on Thursday, noting a year-over-year sales decrease of 26.1%. Darden is the group that owns brands like the Olive Garden, LongHorn Steakhouse and Cheddar’s, among many others, and those are some of the restaurants that have been able to survive the pandemic.

But looking ahead, as more places start to open up, how can various restaurants differentiate themselves and bring in that revenue?

Big chains like Olive Garden and Chili’s were able to rely on large balance sheets and access to cash, according to R.J. Hottovy, a restaurant analyst at Aaron Allen & Associates. Hottovy said some restaurants that have been getting by on takeout may see new possibilities.

“I think a lot of restaurant brands, particularly full-service brands, have a once-in-a-lifetime opportunity to reinvent themselves effectively,” he said, especially around training staff to provide good service.

Kevin Burke, an investment banker at Citizens Capital Markets, said the big restaurants will likely be able to adjust to new expectations faster. So, for the time being, they can “stock up on masks and gloves and give them to people as they ask for them for free. Markings for where you should stand, and social distancing.”

There’s no telling how long restaurants will need to do those things to make people feel safe. Matt Schulz at LendingTree recently surveyed consumers about their willingness to go out to eat. “About a quarter of people said they’d only go out with people in their immediate household,” he said.

Schulz said 20% of respondents said they would only go if they could sit outdoors.

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